ANKARA, Nov. 27 (Xinhua) -- Turkish consumers are heading into the final month of 2025 with a slightly more positive outlook on their finances, as sentiment indicators edge higher ahead of an expected Central Bank rate cut in December.

The Turkish Statistical Institute reported on Thursday that its headline economic confidence index rose to 99.5 in November, up from 98.2 in October. The reading, the highest since March, reflects strengthened expectations among both businesses and households. While still below the 100-point line that separates pessimism from optimism, the rise signals a cautious recovery in households' confidence regarding their personal finances and purchasing power.

This improvement comes as policymakers weigh the pace of monetary easing while still confronting persistent inflation.

Annual inflation currently stands at 32.87 percent. Although lower from the 75 percent-plus levels seen earlier this year, price pressures remain elevated, limiting the relief for households.

The Central Bank has been gradually cutting its benchmark one-week repo rate since mid-2025. Following a 100-basis-point reduction on October 23, the policy rate sits at 39.5 percent. Markets widely anticipate another 100-200 basis-point cut at a meeting scheduled for Dec. 11.

Analysts say these expectations have helped lift consumer confidence, as households look ahead to easier credit conditions in the new year.

"Consumers are responding to signals that the tightening cycle has ended and easing will continue, even if at a measured pace," said Atilla Yesilada, an Istanbul-based economist.

He suggested that a further cut would solidify the feeling that "the worst of the squeeze on household finances may be behind us."

The Turkish lira has held relatively steady in recent months. However, analysts stress that strict macroprudential controls underpinned the stability. Any renewed currency weakness remains a key risk that could quickly revive inflation in the import-dependent economy and complicate the Central Bank's easing campaign.

Despite this delicate balance, the November confidence data suggests many households trust policymakers can continue cutting rates without triggering instability.

Independent economist Mustafa Sonmez cautioned, "A cut of 100 to 200 basis points is already priced in, but policymakers must be extremely careful. Underlying inflation remains sticky." He stressed that only a moderate cut would support morale without undermining the disinflation process.

Price pressures are most acute in food, rents, and services, categories that heavily affect low- and middle-income families.

Central Bank Governor Fatih Karahan affirmed this week that policy remains firmly focused on bringing inflation down, comparing it to a "virus" the bank would fight "in line with our targets."

Next week's November inflation data will be a critical gauge, with a hotter-than-expected reading potentially forcing the Central Bank to adopt a more cautious approach in December.